Benchmarking involves thoroughly analyzing a company’s operational procedures, financial performance indicators, or other critical metrics and comparing these to industry standards or leading businesses in that sector. This process helps organizations understand where they stand in terms of efficiency, profitability, or performance compared to peers and sets a foundation for optimizing and refining practices to reach or exceed these standards. The goal is to locate gaps in processes and implement changes that align the company with best practices.

For example, a finance team might use benchmarking to analyze their month-end close time compared to industry standards, thereby pinpointing inefficiencies. Another example could include measuring the accuracy and speed of balance sheet reconciliations and comparing them to timeframes achieved by top-performing competitors. By leveraging insights gained from such analyses, companies can make informed decisions to enhance productivity and competitiveness.